2005 (6) TMI 186 - AT - Central Excise

Summary

Issues:
Claim for Modvat credit on inputs destroyed in fire before completion of manufacturing process.

Analysis:
The appellants claimed Modvat credit on inputs destroyed in a fire incident before the completion of the manufacturing process. The lower appellate authority denied the credit, stating that the inputs were destroyed before being utilized in the manufacturing process. The main contention of the assessee was that the inputs were being processed when the fire occurred, thus should be considered as utilized in the manufacturing process.

Upon examination of the records and hearing both parties, the judge found no valid reason to interfere with the denial of credit. The judge highlighted that for the benefit of input-duty-credit under Rule 57A of the Central Excise Rules, it was essential that inputs were used in or in relation to the manufacture of the final product. In this case, the appellants did not complete the manufacturing process before the fire incident. Both inputs in stock and under processing were destroyed, resulting in no finished product. Therefore, it was concluded that the inputs were not utilized in the process of manufacturing finished goods, and the denial of credit was upheld. Consequently, the appeal was dismissed.